PUR.L Regulatory News (PUR)

13 Feb 2007 07:01

Pure Wafer PLC13 February 2007 13 February 2007 Pure Wafer plc ("Pure Wafer" or the "Company") Acquisition Swansea based Pure Wafer plc, the provider of high quality silicon wafer reclaimservices for many of the world's leading semiconductor manufacturers as anintegral part of their cost control programmes, today announces that it hasacquired the trade and assets of Exsil, Inc, a wafer reclaim facility based inArizona, USA from Rockwood Specialties Group, Inc. The purpose-built 36,000 sq ft facility with state-of-the-art wafer reclaimequipment and cleanrooms based on a 4.1 acre leasehold site in Prescott, Arizonaemploys a workforce of 75 people and has been operational since 1997. Thebusiness currently focuses on reclaim of 200mm and smaller diameters, and isqualified with a number of important US semiconductor manufacturers. Themajority of these are new customers to Pure Wafer and therefore provide astrategic opportunity for the enlarged group. Highlights • Pure Wafer plc has acquired its second wafer reclaim facility, based in Prescott, Arizona for a total consideration of US$11.2m fully funded through debt. • The high tech, high volume facility is currently trading profitably from the existing business of reclaiming smaller diameter wafers. • As well as a top class 200mm manufacturing line the plant also includes several 300mm capable assets. Pure Wafer is planning capital expenditure of US$7m to complete a 300mm reclaim line at the site involving replication of the technology used at Pure Wafer's existing world class facility. • 300mm capacity within the facility is scaleable to 80,000 wafers per month with further capital expenditure. This is comparable to Pure Wafer's Swansea facility which is expected to have installed capacity of 80,000 wafers per month by mid-2007. • The acquisition will provide Pure Wafer with an enhanced competitive edge in the fast growing US market and brings with it a wealth of experience and expertise to compliment the Pure Wafer team. • The Prescott site will be EPS enhancing in the first full financial year. • Earnings from the new site are expected to form over 30% of the enlarged group's earnings within the next few years, providing the group with an important enhancement to its rapid growth in earnings. • The Company will continue with its strategy of ramping the Swansea facility in response to the increasing demand for its high tech 50 nanometre reclaim products. Assets acquired The acquired leasehold facility in Prescott, Arizona is a purpose built plantwith high quality process services and cleanrooms close to many existing andplanned customer facilities, scaleable with further expenditure to 300mmcapacity of 80,000 wafers per month, and with adjacent land of 1.6 acresavailable for further capacity increases. The plant has reclaim capacity inexcess of 100,000 smaller diameter wafers per month, and the Company plans togrow this volume in addition to its 300mm ramp. For comparison, managementbelieve that to build a similar facility on a greenfield site with installed300mm capacity would cost cUS$50m, and would take approximately two years tobreak into positive EBITDA during qualification and the ramp phase of facility.Existing unaudited annual revenues were US$8.6m with EBITDA of approximatelyUS$0.4m. The assets acquired provide Pure Wafer with a rapid, highly efficient and lowrisk route to becoming a domestic service provider in the US marketplace forwafer reclaim, enabling the Company to extend its market penetration without theprohibitive expense and long delays associated with a greenfield site. Consideration & Funding The total purchase cost of US$11.2m comprises a payment of US$7.5m oncompletion, US$1.75m interest free deferred consideration falling due after 12months and US$1.95m interest free deferred consideration falling due after 24months. The initial payment of US$7.5m has been debt funded through a 4 year fixedinterest rate US$ loan from Royal Bank of Scotland ('RBS'). A facility has beenset up to provide funds for the deferred consideration, and if these facilitiesare utilised the interest rate will be fixed in advance of the drawdown. Afurther asset finance facility has been arranged with RBS in order to providefunding for the planned US$7m of capital expenditure. Rationale behind acquisition Providing local reclaim services allows customers to benefit from short cycletime, lower cost and easy-to-manage relationships. Acquiring the Exsil facilityin Arizona and adding a 300mm production line will enable Pure Wafer to extendits product offering and increase its market penetration in the US. The acquisition delivers Pure Wafer a series of new customers who are reclaiming200mm wafers only at the moment, but are moving to, and currently investing in300mm infrastructure. The US wafer reclaim market is a significant part of the rapidly growing global300mm reclaim market. The existing Swansea site already enjoys substantial USdemand, and with the Arizona site supplementing this, Pure Wafer is well placedof the forecast continued growth. The acquisition gives Pure Wafer the ability to service the demands of ourcustomers and create a facility, similar to that at Swansea, at a far lower costand lower risk to a greenfield set up. Strategy for growth The existing reclaim business of 200mm wafers and smaller will be grownsignificantly in the short term by switching the facility to a 7 day operation.Following acquisition, the business will be EBITDA positive and is expected toturn PBT positive with commencement of 300mm reclaim sales. The 300mmqualification process with major customers will commence immediately followingcompletion of the production line. The 300mm line is expected to be qualifiedand ramping volume production by the fourth quarter of this calendar year. The Swansea site, with its highly skilled workforce, is due to receivesubstantial capital investment in order to allow it to focus on specialised highquality wafer reclaim products to service growth in demand for these across theworld, and to increase activity on the technologically advanced 50 nanometreproduct offering which is now ramping in volume production 300mm market update The demand for 300mm reclaim remains strong as the forecast explosive growth in300mm semiconductor production facilities continues unabated. There arecurrently 51 facilities in a 300mm volume ramp phase across the globe. A further29 facilities are under construction or taking on first silicon. Of these newfacilities, 12 are expected to enter the ramp phase in calendar year 2007, withthe remainder expected to be ramping by the end of 2008. Group current trading Interim results for the half year to 31 December 2006 for Pure Wafer plc will beannounced on 28 February 2007. The Board expects to report profits in line withmarket expectations. Trading in the second half of the financial year remainssatisfactory. Giles Clarke, Chairman, Pure Wafer, commented, "This is a company transforming transaction. At a time when 300mm wafer reclaimcontinues to grow quickly, we have acquired a unique site for economical growthof our 300mm capacity and enhancement of our competitive edge in the US. Itgives us an excellent platform to benefit from the very strong growth forecastin that market and the opportunity to work with a new group of customers. Wealready have a strong management team at Pure Wafer, experienced in installingand ramping 300mm production lines, and we are welcoming a wealth of furthersemiconductor and management experience with the acquisition of this newfacility. Our new facility has the potential to contribute to over 30% of thegroup's earnings within the next few years, and will be EPS enhancing within thefirst full financial year." ENQUIRIES Pure Wafer plc (www.purewafer.com) Tel. +44 (0) 1792 311 200Keith Baker, Chief ExecutiveJames Dearing, Group Finance Director Financial Dynamics Tel. +44 (0) 207 269 7157Billy CleggEdward Westropp This information is provided by RNS The company news service from the London Stock Exchange